Patent v. Latent Ambiguity: Not Always Construed Against the Insurer

JNJ Logistics, LLC v. Scottsdale Ins. Co. (6th Cir. June 30, 2015)

The Sixth Circuit Court of Appeals, despite finding that there was an ambiguity in the insurance policy’s designation of additional insureds, nevertheless declined to grant the purported additional insured summary judgment. The endorsement in question identified two different additional insureds at two different locations: Sears, 3456 Meyers and Sears SLS, respectively. An entity known as Sears Logistical Services, also referred to as SLS, sought coverage as an additional insured for an incident occurring at 3456 Meyers in Memphis, Tennessee. There was a dispute between the parties as to whether it was known that “Sears, 3456 Meyers” referred to SLS. On one hand, the named insured reported to the insurer that SLS was operating at 3456 Meyers. On the other hand, the named insured furnished the identities of the additional insureds to the insurer — meaning that the named insured had designated one as “Sears” and the other as “Sears SLS” — which indicated that Sears and SLS were to be treated as separate entities, thereby meaning that “Sears, 3456 Meyers” was not intended to refer to SLS. The court focused on the difference between a latent ambiguity and a patent ambiguity. The latter refers to an ambiguity that exists based on the words themselves, whereas the former is an ambiguity caused by otherwise unambiguous words when applied to the facts. The court further stated that, whereas a patent ambiguity must be interpreted in favor of the insured, the same was not true for a latent ambiguity, which is, by definition, of an issue of fact. For this reason, the court refused to grant the policyholder summary judgment, determining that the intent of the parties was a question for the jury.